The Gazprom headquarters hosted a working meeting between Alexey Miller, Chairman of the Company's Management Committee and Dusan Bajatovic, Chief Executive Officer of Srbijagas.

The meeting participants discussed the progress in implementing joint projects: South Stream and Banatski Dvor UGS facility,laying stress on the status of the feasibility assessment for the South Stream onshore sections in Europe.Today, the national feasibility study is finalized in Serbia as well as in Slovenia, Austria, Croatia and Romania.

Moreover, during the negotiations Alexey Miller and Dusan Bajatovic considered the issue of extending the contract for Russian gas supply to Serbia. It was highlighted that further cooperation between Russia and Serbia in the gas sector should develop on a mutually beneficial basis with due regard for long-term strategic interests of the parties.

Background

In 2010 Gazprom supplied Serbia with 1.76 billion cubic meters of natural gas.

Founded on October 1, 2005 by the Serbian Government within the reorganization of the state-owned Naftna Industrija Srbije – Serbian Oil Industry (NIS), Srbijagas is the Serbian state-owned company dealing with natural gas transmission, distribution and storage in Serbia.

With a view to diversify the natural gas export routes Gazprom is planning to construct a gas pipeline running under the Black Sea to the countries of Southern and Central Europe – the South Stream project.

A provision is made to gradually build up the South Stream throughput. The overall design capacity of the offshore section will reach 63 billion cubic meters per year. The first gas pipeline string is to be commissioned in late 2015.

Intergovernmental agreements were signed with Bulgaria, Serbia, Hungary, Greece, Slovenia, Croatia and Austria in order to implement the onshore gas pipeline section. Romania is another potential South Stream participant.

At present, the South Stream Consolidated Feasibility Study is being elaborated including the studies for the offshore section and for the respective gas pipelines in host countries of Southern and Central Europe.

On January 25, 2008 Russia and Serbia signed the Umbrella Intergovernmental Agreement for the South Stream project and the Banatski Dvor UGS facility.

On May 15, 2009 Gazprom and Srbijagas signed the Basic Agreement of Cooperation for the South Stream project in Serbia. The document sets the specific principles of interaction between the parties at the pre-investment stage and determines the conditions and the procedure of incorporation as well as the operation mechanisms for the joint project company.

In November 2009 registration of the joint project company, South Stream Serbia AG, was accomplished. Gazprom holds a 51 per cent stake in the company and Srbijagas – a 49 per cent stake.

On December 24, 2008 Gazprom and Srbijagas inked the Memorandum of Understanding on cooperation in gas storage as part of the Banatski Dvor UGS project.

In October 2009 the Agreement on Setting up a Joint Venture for the Banatski Dvor UGS Facility was signed.

The joint venture responsible for construction and operation of the underground gas storage facility with the working gas capacity of 450 million cubic meters was registered in February 2010. The joint venture has the following shareholding structure: Gazprom – 51 per cent, Srbijagas – 49 per cent.

The Banatski Dvor UGS facility will be created on the basis of the eponymous depleted gas field situated 60 kilometers to the north-east of the Novi Sad town.